Valeant subpoenaed by U.S. prosecutors over drug pricing

[October 15, 2015]  (Reuters) - Valeant Pharmaceuticals International Inc <VRX.TO> <VRX.N>, under fire for price increases of its two heart drugs, said it was subpoenaed by U.S. prosecutors on its pricing, drug distribution and patient assistance programs.

Valeant's U.S.-listed shares were down 8.7 percent at $161.80 in premarket trading on Thursday.

The company, which came under attack from Democratic lawmakers in late September over "massive" price increases, said it was reviewing subpoenas from the offices of attorneys for the District of Massachusetts and the Southern District of New York.

Valeant intends to cooperate with the investigations, the company said late on Wednesday.

All 18 Democratic members of the House of Representatives Committee on Oversight and Government Reform had urged their chairman to subpoena Valeant to provide documents relating to its drugs prices.

Valeant had tripled Isuprel's price and raised Nitropress price more than six times after buying them in February.

The company said it also responded to a letter from U.S. Democratic Senator Claire McCaskill concerning Valeant's heart drugs.

Chief Executive Michael Pearson wrote to McCaskill that the company hired a consultant to review the two drugs' pricing and reimbursement by the Centers for Medicare and Medicaid Services, the Wall Street Journal reported earlier. (http://on.wsj.com/1RJugJ7)

The consultant found that "there was considerable room to increase the price of both drugs without unduly depleting the funds available to the hospitals from payers" even after price increases, the Journal reported, citing the letter.

Pearson has built Valeant into one of the world's largest drugmakers through a series of acquisitions. His business model has featured price hikes and deep cuts in research spending.

Shares of many pharmaceutical companies have slumped since Democratic presidential hopeful Hillary Clinton last month proposed ways for the government to prevent "profiteering" by the industry.

Clinton's comments came after the New York Times reported on how a startup biotechnology company, Turing Pharmaceuticals, bought 62-year-old Daraprim and raised the price of the treatment for a dangerous parasitic infection to $750 a tablet from $13.50.

Massachusetts Attorney's office, Southern District of New York Attorney's office and Valeant could not be reached for comment outside business hours.

The U.S. stock had fallen 18 percent through Wednesday's close since Sept. 22 when Clinton proposed a $250 monthly cap on out-of-pocket prescription drug costs and other measures.

(Reporting by Ismail Shakil and Ankur Banerjee in Bengaluru; Editing by Gopakumar Warrier and Don Sebastian)

[© 2015 Thomson Reuters. All rights reserved.]

Copyright 2015 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.